The Opportunity of Micro-Niches in HR Software

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Jul 2, 2021

It would be natural to think that there is little room for new vendors in the world of HR tech unless they have state-of-the-art AI or something equally novel. If we consider, for example, workforce management, the high-end of this space is dominated by companies like UKG, WorkForce Software, and Ceridian Dayforce. While at the low end there are innumerable companies offering scheduling and time-and-attendance software, which would seem an unappealing market to enter. Yet a small company (7shifts) out of Saskatoon (not the first place that comes to mind as a high-tech hub) has found a micro-niche in offering employee scheduling software for restaurants, many of them only having one location.

If you look around, it becomes clear that there are many other micro-niche workforce-management related technologies. There is software for HVAC contractors to help them dispatch technicians (FieldEdge). If you happen to be a dentist in Saskatoon or elsewhere in Canada and you’re looking to track staff hours and enhance team communication, there is a tool for you, too (ClearDent).

The reason there is a demand for micro-niche products is that each industry has its own peculiar requirements. Any product designed to work over a wide range of businesses will have features that you don’t need, which adds complexity. It may also be a bit clunky in delivering the features you do need.

The reason that running a micro-niche HR software business is possible is that it’s easier than ever to code a piece of software thanks to modern coding tools and the availability of cheap overseas programming talent. It’s also easier than ever to sell to a niche thanks to programmatic advertising on the internet. For example, if you decide you want to sell something to single-location Chinese restaurants in Europe, then you have a decent chance of reaching them just from your desktop.

It’s also the case that these micro-niches are not as micro as they seem. In the U.S., there are close to half a million independent restaurants. For vendors, this is more like a B2C opportunity than a B2B one, but it’s an opportunity nonetheless.

There are likely to be many underserved micro-niches, where managers need help managing their workforce. The small niches are not attractive to the big vendors, so that opens up an opportunity for everyone else. Let’s hope innovation in HR tech begins to do a better job serving small businesses, as well as large ones. Micro-niche products are the best route to that.

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